BOI, FG NCDMB in $100m oil and gas project

The Nigerian government has floated a $100million (about N28.4 billion) Nigerian Content Intervention Fund (NCI Fund) to take care of the challenge of securing credit facilities to fund the activities manufacturers, service providers and other key players in the Nigerian oil and gas industry.

The pool of funds would be managed by the Nigerian Content Development and Monitoring Board (NCDMB) in conjunction with the Bank of Industry (BOI) to provide lending directly to qualified players in the oil and gas industry under competitive terms.

The new funding arrangement is different from the old Nigerian Content Development Fund (NCDF), which provided partial guarantees and 50 per cent interest rebate to service companies obtaining facilities from commercial banks for asset acquisition and projects execution.

Under the old model, which became operational in 2012, three indigenous oil servicing companies – Ladol, Starz and Vandrezzer were able to benefit from finances they used in running their operations in the industry.

At the signing of memorandum of understanding (MoU) to signal the formal take off of the NCI Fund, Acting Executive Secretary of the NCDMB, Patrick Obah, said the Board opted for the new model in response to the feedback from industry operators who experienced difficulties accessing funds to carry out their bsuiness.

He said the Board was leveraging on BOI experience in development financing, pointing out that the MOU reflected the determination of the two agencies to lead the industrialization process, by closing the financing gap in projects with high prospects of creating employment, retaining revenue in-country and adding value to the economy.

Benefiting companies are expected to deploy the funds for the acquisition of fixed assets (machinery and ancillary equipment) as well as provide working capital, for leasing of industrial and business equipment and constructions and acquisition of marine vessels.

Mr. Obah said the revised conditions for the NCI Fund include compliance with the Treasury Single Account (TSA) policy of the government, with on-lending to beneficiaries at eight per cent interest rate, long tenure of up to 10 years, single obligor limit of $10 million and varied application, including manufacturing and asset ownership.

According to the acting Managing Director of BOI, Waheed Olagunju, the mandates of NCDMB and BIO were similar, as both agencies were created to drive industrialization of the country and add value to the nation’s natural resources.

He assured that the NCI Fund would avoid the pitfalls of the past, which limited the success of the previous funding arrangement, by ensuring that qualified service companies were granted access to the funds they require to grow their capacity.

Chairman of the Petroleum Technology Association of Nigeria (PETAN), Bank-Anthony Okoroafor, commended the Board for being responsive to the demands of the industry stakeholders who clamored for a change in the operating model of the NCDF